The Chinese Government is telling enterprises to prepare to meet the latest European Union regulations on chemical substances, another of many international standards that stifles China's manufacturing-heavy foreign trade.

The European Parliament passed on Wednesday a new regulation on the import of chemical substances to the European Union. The new system, called Registration, Evaluation and Authorization of Chemicals (REACH), is to be enforced from June 2007. It will require the registration of some 30,000 chemical substances in use today.

REACH comes after the EU's WEEE (Waste Electrical and Electronic Equipment) and RoHS (Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment) directives, both of which have posed challenges to industries in China.

The European Union is the largest importer of China's chemical substances and relevant products. The country now has 30,000 enterprises directly related to the chemical industry, said Zhang Shaoyan, a director from the Shangdong Entry-Exit Inspection and Quarantine Bureau.

The new rule, though targeted at chemical substances, will influence about 5 million types of products ranging from textiles, cosmetics, electromechanical products, and other related products.

Statistics from the General Administration of Quality Supervision Inspection and Quarantine (GAQSIQ) show that China's exports to the European market may fall 3.7 billion euros (US$4.8 billion) if the chemical substances and relevant products from China fail to meet the new requirements.

The price of exported products will increase as a result of the cost of registration and evaluation, and reduce the competitiveness of Chinese products in overseas markets. China now imports high-tech and high value-added products from the European Union. REACH will also raise the average price of these imported products, according to the GAQSIQ.

Government bodies have been reminding enterprises to pay attention to the new rules and be prepared to try and reduce losses that may result.

REACH may influence China's products in other markets besides the European Union. The new regulation may become a reference for other countries in setting standards, said Wang Zimin, a senior engineer from China Petroleum and Chemical Industry Association. The United States and Japan may learn from the regulation and adopt similar measures in the future, he said.

"It is by far the most authorized regulation on chemical substances, and also the most complete one," said Wang, referring to the 70-page directory accompanying the ruling.

Wang suggests the Chinese Government work on a new chemical substance regulation as early as possible. Currently there is no national regulation system on chemical substances, and over 10 departments overlap in setting various standards.

Wang Xin, a director from GAQSIQ, said enterprises are not yet fully aware of the new regulations. "Many enterprises don't know what the REACH is at all, and some know very little about it," he said.